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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Rohan, the Finance Director of Meridian Pharma Ltd, is a key management personnel. His brother-in-law, who is not a relative as defined in AS 18, owns a firm that supplies packing materials to Meridian. Rohan's father holds 60% of Gupta Chemicals Ltd, which also supplies raw materials to Meridian. Which of these is a related party of Meridian under AS 18?

Only Gupta Chemicals Ltd is a related party. Rohan's father is a relative under AS 18 and holds 60%, giving him control over that company. A brother-in-law is outside the AS 18 list of relatives, so the packing materials firm is not a related party.

  1. ABoth firms, because a family connection with a director exists
  2. BOnly Gupta Chemicals Ltd, because Rohan's father is a relative and controls itCorrect
  3. CNeither, because they are not under common control with Meridian
  4. DOnly the packing materials firm, because it is owned by a family member

Explanation

AS 18 defines relative as spouse, son, daughter, brother, sister, father and mother who may influence or be influenced by that person. Brother-in-law is not in this list, so the packing firm is not a related party. Rohan's father is a relative of key management personnel and holds 60% in Gupta Chemicals, so it is controlled and is a related party. Common control with Meridian is not required.

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